[EN] Bitmain: Inside one of the world’s largest bitcoin mines

Joon Ian Wong, Johnny Simon
August 17, 2017

One of the world’s largest bitcoin mines is located in the SanShangLiang industrial park on the outskirts of the city of Ordos, in Inner Mongolia, an autonomous region that’s part of China. It’s 400 miles from China’s capital, Beijing, and 35 miles from the the city of Baotou. The mine is just off the highway, near the intersection of Latitutde 3rd Road and Longitude 3rd Road. It sits amidst abandoned, half-built factories—victims of an earlier coal mining boom that fizzled out, leaving Ordos and its outlying areas littered with the shells of unfinished buildings.

The mine belongs to Bitmain, a Beijing-based company that also makes mining machines that perform billions of calculations per second to try and crack the cryptographic puzzle that yields new bitcoins. Fifty Bitmain staff, many of them local to Ordos, watch over eight buildings crammed with 25,000 machines that are cranking through calculations 24 hours a day. One of the buildings is devoted to mining litecoin, an ascendant cryptocurrency. The staff live on-site in a building with a dormitory, offices, a canteen, and a repair center. For recreation, they play basketball on an unfinished cement court.

Bitcoin mining consumes enormous amounts of electricity, which is why miners seek out locations that offer cheap energy. The Ordos mine was set up in 2014, making it China’s oldest large-scale bitcoin mining facility. Bitmain acquired it in 2015. It’s powered by electricity mostly from coal-fired power plants. Its daily electricity bill amounts to $39,000. Bitmain also operates other mines in China’s remote areas, like the mountainous Yunnan province in the south and the autonomous region of Xinjiang in the east.

Despite the costs, bitcoin mining remains a lucrative industry. At the current bitcoin price of about $4,000 per bitcoin, miners compete for over $7 million in new bitcoins a day. The more processing power a mining operation controls, the higher its chances of winning a chunk of those millions. The Ordos mine accounts for over 4% of the processing power on the bitcoin network—a huge amount for a single facility.

The Bitmain mine in Ordos, Inner Mongolia, has eight buildings containing mining machines. One of them is dedicated to litecoin and seven mine bitcoins. An additional building is inactive. (Aurelien Foucault for Quartz)

View of one of the buildings in the compound. (Aurelien Foucault for Quartz)

The exterior of one of the mining units. (Aurelien Foucault for Quartz)

Leftover tubing and cables lying on the ground between two mining units. (Aurelien Foucault for Quartz)

Bitmain to Set High Standards with State-of-the-Art Xinjiang Data Center

Nishant Sharma
November 5, 2016

Beijing-based Bitmain Technologies Limited, in partnership with several investors, is in the midst of realizing a one-of-its-kind data center in China’s North Western province of Xinjiang.

The planned data center would be capable of consuming up to 135 megawatts of power, which will add it to the list of the highest powered data centers in the world. Wind and solar energy would be the primary source of power for the data center. It is specially designed for high-performance computing and, considering the interest of most investors in the data center, mining of cryptocurrencies such as Bitcoin will be its major application.

Bitmain, with its expertise in building and operating similar data centers in China and abroad, has helped design the data center’s cooling and dust-free system. It has also helped obtain the necessary permissions and infrastructural support from the provincial authorities.

Bitmain hopes that this unique data center will set higher standards of efficiency and productivity for bitcoin mining facilities worldwide. To this end, it will also release the detailed plans of the data center after its successful completion so that the public can learn from the same. According to Bitmain’s Co-CEO Jihan Wu, “We have seen that most data centers in the mining industry are wasting considerable money or other resources. We want to provide a more professional and cost-saving example to the industry.”

A majority of the planned 45 structures were sold before construction began. The data center was originally scheduled for completion by the end of 2016 but may exceed that deadline because of an unexpectedly cold winter in Xinjiang.

Beijing-based Bitcoin ASIC hardware producer and mining giant, Bitmain, announced on November 5 that it’s in the process of building a major data center complex in the northwest of China. The company says the facility will be capable of consuming up to 135 megawatts of power and is set to become the second largest data center in the world.

“[The facility] is specially designed for high-performance computing and, considering the interest of most investors in the data center, mining of cryptocurrencies such as Bitcoin will be its major application.”

Xinjang: Cold, Dry Climate is Ideal

The data center is to be located near the city of Karamay in the northwestern province of Xinjiang, which is the largest Chinese administrative division in the country. According to Bitmain’s international marketing manager, Nishant Sharma, Xinjang was chosen for its “bitterly cold and dry climate,” which is ideal for bitcoin mining, and for its access to government-supported, low-cost wind and solar electricity.

Additionally, Sharma noted:“The government is supportive of new technologies that can develop the region's economy and generate more employment opportunities.”

The facility will consist of 45 dust-free buildings with advanced cooling systems. If these were to be filled completely with Bitmain’s most advanced mining equipment — the AntMiner S9 — calculations by Bitcoin Core and Blockstream developer, Matt Corallo, suggest the data center could theoretically produce over 1400 petahash per second, almost three-quarters of the estimated hash rate currently on the Bitcoin network.

This upper-bound estimate seems unlikely to become reality, however. Sharma noted that Bitmain owns “a very small share” of the data center. The rest of the facility is owned by different investors.

“We hope it will be used for various purposes that an efficient and powerful data center can be used for,” Sharma told Bitcoin Magazine. “We do not know what percentage of investors would use it for mining bitcoin, altcoin — or for even mining [at all]. Frankly, I wouldn't assume that the entire facility will be dedicated to bitcoin mining.”

Bitmain could not disclose how many investors are involved with the project, nor could the company reveal any names.

Centralization Concerns

As the announcement of the data center first circulated through social media, the news was not welcomed equally by everyone. For some, the mock-ups published by Bitmain serve as a stark reminder of the degree of mining centralization that has developed over the past years; well over half of all hash power on the Bitcoin network is currently controlled by less than half a dozen Chinese mining pools. With the establishment of the data center, an increasing share of hash power could become more geographically centralized within the country as well.The announcement prompted Bitcoin Core developer, PeterTodd, and Vice Chairman of The BitFury Group, George Kikvadze, to voice concern that the data-center could represent a potential target for adversarial forces or governments. Bitmain refrained from commenting on this issue.The company did note that designs for the facility will be made “open source” after the data center is built. This could help other bitcoin miners achieve a similar level of efficiency, Sharma explained to Bitcoin Magazine.“We will release the plans or other details that make this data center as effective as it is planned to be. We have gathered this knowledge from operating data centers for bitcoin mining on a very large scale and in various locations. We will release these details so everyone can use our knowledge to build similarly efficient data centers for bitcoin or altcoin mining.”Bitmain’s facility is currently under construction. It was originally planned to be completed in about a month from now, but the unexpectedly cold winter in Xinjiang has delayed the process. Bitmain does estimate that the facility will be completed by end of this year.

Beijing-based Bitcoin ASIC hardware producer and mining giant, Bitmain, announced on November 5 that it’s in the process of building a major data center complex in the northwest of China. The company says the facility will be capable of consuming up to 135 megawatts of power and is set to become the second largest data center in the world.

According to Bitmain’s Co-CEO Jihan Wu, “We have seen that most data centers in the mining industry are wasting considerable money or other resources. We want to provide a more professional and cost-saving example to the industry.”

Bitcoin Is Forking. Again.

In November there will be three versions of the world's most popular cryptocurrency.

Jordan Pearson
Aug 16 2017

Just a few years ago it seemed like bitcoin was a singular force, which in retrospect was incredibly naive since it's open source tech managed by a bunch of fighting nerds.

After a years-long debate about how best to speed up the bitcoin network failed to resolve in unanimous agreement, in July bitcoin "forked," a term for when open-source software gets cloned by users who want to create their own version. This created two different versions of the world's most popular digital currency. Now, the fork is becoming a trident. On Wednesday, a group of bitcoiners scheduled yet another split for the network in November, which would create a third version of bitcoin.

So, what makes this version different from the others?

Right now, the bitcoin network can sometimes take a long time to process transactions due to so many people using it. This is because the "blocks" of transaction data that get added to bitcoin's public ledger, the blockchain, are getting full. In the weeks preceding the fork, bitcoin coalesced around a solution called "segregated witness," which will change how data is stored in blocks to free up some space when it kicks in later in August. But the size of the blocks themselves will stay at one megabyte on the original bitcoin blockchain.

Still, some bitcoiners maintained that the only way to speed bitcoin up for the foreseeable future was to increase the size of blocks themselves. So, a group of bitcoin companies and developers got together and launched a fork called bitcoin cash, which does not include segregated witness. It bumped the size of blocks up to a maximum of eight megabytes. That fork was widely anticipated to be a failure before it happened, but at the time of writing, bitcoin cash is trading above $300 USD per coin, which is comparable to cryptocurrencies like ethereum. Sounds like everyone got what they wanted, right? Oh, no.

There's a third group of bitcoin developers, companies, and users who advocate for a "best of both worlds approach." This group includes Bitmain, the largest bitcoin infrastructure company in the world, and legendary bitcoin developer Jeff Garzik. They got together back in May and signed what is known as the "New York Agreement," which bound them to implement a two megabyte block size increase alongside segregated witness via a hard fork within six months of the time of signing. They call the fork Segwit2x.

Now, that's exactly what's happening. According to an announcement posted to the Segwit2x GitHub repository, a bitcoin block between one and two megabytes will be created at block 494,784. After that, anybody who wants to join the New York Agreement signatories on the Segwit2x chain can create bitcoin blocks on top of that one. Thus, a new blockchain with its own set of rules will be created. Bitcoin's timing works via blocks, which can come at unpredictable intervals (although usually around one every ten minutes), and so the exact timing of the hard fork isn't known, but it should occur in November.

To recap, three months from now, there will likely be three different versions of bitcoin all attempting to prepare the currency for more traffic in different ways. Just so it's super-crystal-clear, here's what the main differences are:

What does any of this mean? Well, basically, things are about to get even more interesting as the community and industry ecosystem decides which bitcoin versions to support, and how. One may even die out. At the very least, we'll get a real-time test of how these different approaches to scaling bitcoin eventually work out.

As for which version is the "real" bitcoin, that may be a bit of a personal choice regarding your preferred scaling solution. After all, every version contains the original's transaction history going back to 2009. Bitcoin developer Gavin Andresen, who was a driving force in bitcoin's early days, wrote a recent blog post that cast a wide net around what technical specifics define the "real" bitcoin. Under Andresen's definition, which you can check out here, any one of the three versions could claim the throne as long as they have a majority of community and industry support.